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Indian Handicrafts Industry

India is one of the important suppliers of handicrafts to the world market. The
Indian handicrafts industry is highly labour intensive cottage based industry and
decentralized, being spread all over the country in rural and urban areas.
Numerous artisans are engaged in crafts work on part-time basis. The industry
provides employment to over six million artisans including those in carpet trade!,
which include a large number of women and people belonging to the weaker
sections of the society.
In addition to the high potential for employment, the sector is economically
important from the point of low capital investment, high ratio of value addition,
and high potential for export and foreign exchange earnings for the country. The
export earnings from Indian handicrafts industry for the period "##$-## amounted
to %&' ".( billion.
)lthough exports of handicrafts appear to be sizeable, India*s share in world
imports is miniscule. It is a sector that is still not completely explored from the
point of view of hidden potential areas. India, a country with (+ states and "$
languages and more than ",-- dialects offers an enormous range of handicrafts
from each of the states. .a/or centres in %ttar 0radesh are .oradabad also
known as the "Peetalnagari" (City of Brass), &aharanpur for its wooden
articles, 1erozabad for Glass. The North 2estern state of 3a/asthan has to offer
the famous Jaipuri quilts 4agru and &anganer printed te!tiles and wooden
and wroug"t iron furniture from 5odhpur. The coastal state of 6u/arat comes
with e#$roidered articles from 7utch. Narsapur in )ndhra 0radesh is famous
for its %ace and %ace goods. 4ut this is only a small part of the total product
range. India offers much more.
Handicrafts are classified into two categories:
1. Articles of everyday use
2. Decorative items
The craftsmen use different media to express their originality. The diversity of the
handicrafts is expressed on textiles, metals 8 precious and semi-precious, wood,
precious and semi-precious stones, ceramic and glass.
&e!tile $ased "andicrafts'
9and printed textiles including block and screen printing, batik, kalamkari hand
printing by pen! and bandhani tie and die! are used in products ranging from
bed-covers to sheets, dress material to upholstery and tapestry. The famous
embroidered articles of silk and cotton, often embellished with mirrors, shells,
beads, and metallic pieces are also found in India. :mbroidery is done too on
leather, felt and velvet etc. This segment of the industry accounts for almost half
a million strong employment in addition to a large number of designers, block
makers, weavers and packers involved in the trade.
Clay (etal and Jewellery'
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4rass, copper, bronze, bell metal are used for a variety of wares and in a variety
of finishes. &cintillating ornaments are available in a wide range of patterns,
styles and compositions. .ade from precious metals, base metals, precious and
semi-precious stones; these ornaments have traditional as well as modern styles.
-oodwor.'
2ooden articles in India range from the ornately carved to the absolutely simple.
<ne can find toys, furniture, decorative articles, etc. bearing the art and
individuality of the craftsman. India is known particularly for its lac=uered wood
articles.
/tone Craft'
The intricately carved stoneware made of marble, alabaster or soapstone, etc.,
inlaid with semiprecious stones carry on the heritage of Indian stone crafts.
Glass and Cera#ic'
6lass and ceramic products are a fast upcoming segment in the handicrafts from
India. The age-old production process of mouth-blowing the glass instills a
nostalgic feeling. The varied shapes of ceramic and glass in a number of colours,
would appeal to 2estern aesthetics while retaining the Indian touch.
Craft concentration 0reas'
) wide range of handicrafts are produced all over Indian artmetalware > :0N&
ware, wood carvings and other wooden artwares, imitation /ewellery, handprinted
textiles, shawls as artwares, embroidered goods, lace and lace goods, toys,
dolls, crafts made of leather, lac=uerware, marble crafts etc. )lthough it is difficult
to limit a specific place for the particular craft, the following places are listed for
their particular crafts.
0rt#etalware ' Moradabad, ambhal, Aligarh, !odh"ur,
!ai"ur, Delhi, #ewari, $han%avur, Madras,
Manda", &eedar, 'erala ( !agadhari,
!aselmer
-ooden 0rtwares ' aharan"ur, )agina, Hoshiar"or, rinagar,
Amritsar, !ai"ur, !odh"ur, !agdal"ur,
&angalore, Mysore, *henna"atna, Madras,
'erala ( &ehram"ur +,&-
Handprinted &e!tiles
1 /car2es
' Amroha, !odh"ur, !ai"ur, .arrukhabad, agru
( anganer
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4#$roidered goods ' 'utch +/u%arat-, !aisaimer, &aroda, 0ucknow,
!odh"ur, Agra, Amritsar, 'ullu, Dharmshala 1
*hamba ( rinagar
(ar$le 1 /oft /tone
Crafts
' Agra, Madras, &aster, !odh"ur
Papier (ac"e Crafts ' 'ashmir, !ai"ur
&erracotta ' Agra, Madras, &aster, !odh"ur
5ari 1 5ari Goods ' #a%asthan, Madras, &aster
I#itation Jewellery' ' Delhi, Moradabad, ambhal, !ai"ur, 'ohima
+$ribal-
0rtistic %eat"er
Goods
' lndore, 'olha"ur, hanti )iketan +,&-
/elected crafts poc.ets for ac"ie2ing e!port goal'
)lthough each crafts pockets has its particular problems, a few selected craft
pockets are identified based on their past performance for immediate remedial
attention to stimulate a =uantum in exports of handicrafts in the coming years.
(orada$ad(6P) ' .or Artmetalwares and imitation %ewellery
/a"aranpur (6P) ' .or ,ooden handicrafts ( ,rought iron handicrafts
Jod"pur (7a89) ' .or ,ooden, ,rought 2ron and ea hell handicrafts
:arsapur (09P9) ' .or 0ace and 0ace goods
?<%NT3@-2I&: :A0<3T& <1 9)NBI?3)1T&
The ma/or buyers for handicrafts other than carpets! are as underC
0rt (etalwares ' 3..A., /ermany, 3.'. ( 2taly
-ood -ares ' 3..A., 3.'., /ermany ( .rance
Hand Printed 1 &e!tiles
1 /car2es
' 3..A., 3.'. , /ermany ( *anada
4#$roidered 1
Croc"etted Goods
' 3..A., audi Arabia, 3.'., /ermany
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/"awls as 0rtwares ' audi Arabia, 3..A. !a"an ( 3.'
5ari 1 5ari goods ' 3.'. 3..A., !a"an ( audi Arabia
I#itation Jewellery ' 3..A., 3.'., audi Arabia ( /ermany
(iscellaneous
Handicrafts
' 3..A., /ermany, 3.'. ( .rance
<alue 0dding C"ain in Handicrafts
Identification of market opportunities
0rototype design and development > adaption and refinement
Test marketing
%pgrading e=uipping facilities
&ecuring inputs
:ntrepreneurial hiring, training, managing
0roduction, =uality control and packaging
?osting and pricing
0hysical distribution
:xport market development
)e*s#*sectorpapers*+,,
(a8or =estinations for Indian Handicrafts
D share in "##$-##!
<thers
((D
%.7.
""D
%.&.).
E"D
&witzerland
"D
&audi )rabia
(D
Netherlands
ED
5apan
FD
Italy
FD
6ermany
""D
1rance
,D
?anada
FD
)ustralia
(D
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In the changing world scenario, craft products exported to various countries form
a part of lifestyle products in international market. The impact is due to the
changing consumer taste and trends. In view of this it is high time that the Indian
handicraft industry went into the details of changing designs, patterns, product
development, re=uisite change in production facilities for a variety of materials,
production techni=ues, related expertise to achieve a leadership position in the
fast growing competitiveness with other countries.
The + million craft persons who are the backbone of Indian 9andicraft Industry as
provided with inherent skill, techni=ue, traditional craftsmanship but that is =uite
sufficient for primary platform. 9owever, in changing world market these craft
persons need an institutional support, at their places i.e. craft pockets for value
addition and for the edge with other competitors like ?hina, 7orea, Thailand etc.
&"e Ger#an "andicrafts and Giftware (ar.et
2ith over $( million inhabitants, 6ermany is the largest market for giftware and
handicrafts items in :urope. ) member of and situated within the :uropean
%nion, 6ermany is supplied with giftware and handicrafts from 6ermany as well
as the surrounding :uropean countries such as 1rance, Italy, &witzerland and
)e*s#*sectorpapers*+,,
Countrywise 4!port of Handicrafts
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the %nited 7ingdom and from all other parts of the worldC 3ussia, Hatin )merica,
)frica and )sia.
The size of the total 6erman giftware and handicrafts market varies according to
the definition of giftware and handicrafts. 2ith its present size around =( 2@9>
$illion it corresponds to a broad definition of giftware and handicrafts that
includes the following itemsC home furnishings, artmetalware, table accessories,
*hristmas decoration, woodware and furniture, imitation %ewellers, artificial
flowers1"lants, scents1cosmetics, sweets, toys1com"uter games, books,
discs1videos, watches1%ewellery, certain a""arel1te4tile items and others. The
6erman giftware and handicrafts market grew from B. (#." billion in "##$ to B.
(#., billion in "###, but experienced a slight decline in the first =uarter of (---.
The substantial supply of giftware and handicrafts has transformed the 6erman
giftware and handicrafts market into a fiercely price-competitive market place.
Nevertheless, innovative and new to market giftware and handicrafts items place
still have good market prospects. It is essential for the 6erman giftware and
handicrafts marketers to find new products to stay competitive. )lthough 6erman
consumers may be willing to pay a high price for exclusive items they are very
price conscious and want value for money. )mong traditional gift items, candles,
festive items, including ?hristmas decoration, exclusive gift boxes and gift-wrap,
ribbons, nostalgic calendars and all types of scented items have best prospects.
The 6erman market shows a strong demand for low-priced candles. Thus
imports from 0oland and ?hina have increased substantially. The average
growth for the overall giftware and handicrafts is estimated at "-( percent over
"###-(---.
Co#petiti2e /ituation
6erman giftware and handicrafts consumption is growing more or less in line with
the relatively slow growth rate of income during the last years. Thus,
expectations for additional growth are not very high. )nnual growth rates of
between ".,-( percent are forecast for the next few years for the overall giftware
and handicrafts market. In general the market shows good business
opportunities if prices and =uality are competitive and delivery schedules are
fulfilled.
)part from its own producers, 6ermany is supplied by giftware and handicrafts
from nearly all of the :uropean countries. 6erman firms often import specific
product groups from a particular country. .a/or suppliers of pottery are, for
example, &pain and 0ortugal; fine exclusive stationery comes from Italy,
1rance and &witzerland; candles from 0oland, ?hina and 0ortugal; dried
flowers from the Netherlands etc.
1ierce price competition in 6ermany is intensified by the increasing =uantity of
?hinese and )sian made products on the market. 1or India this situation
)e*s#*sectorpapers*+,,
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coupled with the relatively strong Indian rupee which means that firms proving to
be most successful in the recent past have offered niche market giftware and
handicrafts, i.e., exclusive to Indian handicrafts items or new-to-market products.
0 few wellBesta$lis"ed Ger#an #anufacturers of giftware and "andicrafts
ite#s are'
7oziol 6mb9, :rbach 7rebs-6las-Hauscha 6mb9, :rnstthal
4arti 6mb9, 6arching .argarete &teiff 6mb9, 6iengen
Buni 6mb9 I ?o. 76, 4ramsche 2.1 )6, 6eislingen
3astal, 9oehr-6renzhausen 3osenthal )6, &eib
1artak, Hahr 2. 6oebel 0orzellanfabrik, 3oedental
6I:& 7erzen, 6linde 2alther-6las 6mb9, 4ad Briburg
5et 0apier 6mb9, 4ernau
/ales 2olu#e of specific su$Bsectors (esti#ates)'
&ome estimates of individual giftware and handicrafts subsector volume sales
are provided as followsC
/easonal' .arket insiders estimate the total volume of the seasonal items
market, including ?hristmas, :aster, Jalentines Bay and the 6erman counterpart
of Thanksgiving, at B. G.G billion. In "##G, about B. E billion were spent alone
for ?hristmas decoration, ?hristmas floristic items and ?hristmas trees only.
?hristmas items are usually imported from ?hina, Taiwan, Thailand, 0hilippines
and India. 9owever, Indian ?hristmas decorations as candle stands or
?hristmas tree hangings and soft toys find a ready market in 6ermany if they are
moderately priced.
Ho$$y and art supplies' The present market volume of hobby and art supplies
in 6ermany is estimated at about B. E billion, while the total :uropean market
should amount to B. "( billion. Insiders believe that this specific market
segment still offers some potential for new products. ) recent survey shows that
apart from their school days, most of the 6ermans who do regular BI@ or hobby
work are between +- and +# years "-.$ percent of the 6erman adults! old. 2ith
the fast ageing of the 6erman population a stronger demand for hobby and crafts
is likely.
Incenti2e ite#s' 1rom "##( to "##$, the total 6erman market for incentives
increased from nearly B. E billion to B. + billion.
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&oys' In "##$, annual sales of licensing products amounted to about %&' F.(
billion in 6ermany. )lso in "##$, the toys market volume expanded to B. +
billion. Total annual sales for computer games and learning games alone,
increased to B. ( billion in "##$ compared to the pre-year level of B. ".G
billion.
(ar.et 0ccess
:% member states and )sian countries, ?hina and India in particular, are ma/or
suppliers of giftware and handicrafts to the 6erman market. Indian firms making
a first approach to the 6erman market are advised to have comprehensive
product literature and data sheets professionally translated into 6erman.
)lthough :nglish is widely understood, a well-prepared translation gives an
important marketing edge, particularly in the initial presentation. Indian firms
should preferably appoint an agent or distributor who can maintain a stock
sufficient to answer short-notice orders.
Custo#s =uties
?ustoms duties vary according to material and product. Though duties are high
for a few items, i.e., dried flowers, potpourri "+.G-(- percent!, T-shirts "(.--
"E.(! and hand- woven, woollen blankets "E.F percent!, the ma/ority of customs
duty rates falls in the range of ,-$ percent. 1or exampleC
*ustoms Duties +in "ercent-
?eramics C F." - G.,
Toys C ,.+ - +.E
&tationery C $.F
0lush animals C +.-
Kuilts>blankets C G.,
?andles C (.$
&ilver /ewellery C (.,
In addition, there is a "+ percent sales tax, which is eventually passed on to the
consumer in form of the 2alueBadded ta! (<0&). 4ut the J)T has to be paid
when entering the 6erman market by the exporter>6erman importer.
Items that originate from certain animal species, i.e., snakeskin or hides of some
animal, it must be ensured that the export of these products complies with the
?onvention on :ndangered &pecies ?IT:&!. 3egarding sample orders,
exporters should be aware that one sample with a maximum value of B. ,-
)e*s#*sectorpapers*+,,
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each or, five identical samples of one product group not exceeding a total value
of B. ,-, are usually customs free.
Product /tandards
In view of the wide field of products that could be considered as giftware and
handicrafts, it is difficult to name standards. ?ompliance with :% standards and
regulations is strongly suggested. There are, however, only few product groups
in the giftware and handicrafts field that have to follow standards. It is essential
that *56labelling be observed where re=uired. The ?:-mark including
conformity statement and technical documentation! is mainly re=uired for toys
$$>EG$>::? standard!. 2hile the =uality regulations for candles are obligatory
assuring a certain level of =uality, the toy regulation and the electronic standards
have to be observed because of safety considerationsC
(a8or =istri$ution C"annels
2n /ermany, giftware and handicrafts is distributed through five ma%or channels:
2holesalers
Importers>distributors
?ommission agents>sales representatives
Bepartment stores
.ail-order
Internet sales
Tele-shopping
The individual channels are described in detail in the following.
,holesalers:
4esides offering wide range of goods to retailers for direct sales, this channel
also supplies large =uantities of individual articles. They are very particular in
maintaining consistency in the kind of products and their =uality. <ne of the
distinguishing features of wholesalers is to provide distribution and storage
facilities. &pecialised wholesalers deal in sales to retailers as well as to final
consumers. They maintain high =uality standards and but have a narrower and
in-depth range of arts and crafts.
2m"orters1distributors:
.ost Indian giftware and handicrafts companies use importers>distributors to
market and sell their giftware and handicrafts lines. They buy and sell on their
own account. Thus, the companies take advantage of the distributorLs expertise,
)e*s#*sectorpapers*+,,
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his sales force and his existing distribution channels. Bistributors call on giftware
and handicrafts retailers, purchasing groups and supermarkets. The distributorsL
mark-up varies depending on the giftware and handicrafts item, but at least ,-
percent. 2hile the mark-ups vary according to the distributor; they usually also
depend on the exclusivity of a product and on its competitiveness in the overall
giftware and handicrafts market.
6ermany hosts more than F,,--- giftware and handicrafts retailers. &everal
retailers import directly from the %nited &tates and sell to the 6erman customer.
%sually these are small companies looking for items new to the market and
handling small orders only.
*ommission agents:
?ommission agents provide Indian companies with direct access to the 6erman
market and direct control. Independent commercial agents are normally working
on a ", percent commission and operate on a regional basis. They concentrate
on specialist retailers, purchasing groups and department stores. ?ommission
agent contracts are based on stringent :% and 6erman regulations. )n Indian
firm wishing to appoint an agent should make sure that such standard contracts
meet its expectations. In order to facilitate market entry efforts by the agents
their initial commission is often a few percent higher than the MusualM
commission. These additional payments are to reimburse the agent for
substantial advertising and any special efforts facilitating the new productLs
market entry.
De"artment tores:
Indian companies interested in establishing business contacts with ma/or
department stores, mail-order houses and retailers may also choose the direct
approach. Bepartment stores in particular, prefer to deal directly with
manufacturers. Their buyers are very specialized and only handle a limited
range of products. )t some occasions department stores also buy through
independent commercial agents. Kuite often they have their own buyers as well
as a few agents that usually work with them and who know their assortments. If
a department store decides to import a particular giftware and handicrafts item, it
places bulk rather than small orders.
Mail 7rder:
<n an average, each 6erman consumer buys products totaling to B. ,-- each
year from mail-order houses. There are about (-- mail order companies in
6ermany. In :urope, 6ermany is the largest mail order market, followed by
6reat 4ritain and 1rance. The total :uropean market volume for mail order
products is estimated at approximately B. #- billion. <f the (- ma/or mail order
companies in :urope, "( have their head=uarters located in 6ermany. )mong
them are the worldLs largest mail order companiesC 7tto 8ersand in 9amburg and
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9uelle chickedan: A/ ( *o. in 1uerth. In addition, several 6erman mail order
companies operate in other :uropean countries, as well.
2nternet ales:
6ermany will become market leader among the :% countries with regard to sales
over the Internet by the year (---. It is anticipated that by then 6erman
electronic sales, which are estimated to reach a volume of B. ,-- billion
worldwide in (---, become second in the worldwide ranking after the %nited
&tates and before 5apan. ) typical 6erman Internet user and a ma/or 6erman
mail-order publication is between (--E# years old, is highly educated and earns
more money than the average 6erman consumer. This age group consists of
about F., million 6ermans. &eventy percent of these consumers are male.
)lready today, the Internet is a ma/or sales channel for 6erman mail-order
houses.
$elesho""ing:
KJ? and 9<T are the two tele-shopping channels in 6ermany. They operate all
over 6ermany and offer various types of giftware and handicrafts; /ewellery,
fashion, health, beauty; household consumer goods; collectibles and home
accessories.
)e*s#*sectorpapers*+,,
Cccasions for w"ic" gift ite#s are often
purc"ased
Others
17%
Thank You
4%
Easter
6%
No Special
Occasion
9%
Visit to
friends/fail!
1"%
#hristas
17%
$irthda!
%7%
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/-C& 0nalysis of t"e Indian "andicrafts industry
Cpportunities
3ising appreciation for
handicrafts by consumers in the
developed countries
2idespread novelty seeking
Harge discretionary income at
disposal of consumer from
developed countries
6rowth in search made by retail
chains in ma/or importing
countries for suitable products
and reliable suppliers.
<pportune for agencies to
promote marketing activities
%se of e-commerce in direct
marketing
/trengt"s
)bundant and cheap labour
hence can compete on price
How capital investment and
high ratio of value addition
)esthetic and functional
=ualities
2rapped in mist of anti=uity
9and made and hence has
few competitors
Jariety of products which are
uni=ue
:xporters willing to handle
small orders
Increasing emphasis on
product development and
design upgradation
-ea.nesses
Inconsistent =uality
Inade=uate market study and
marketing strategy
Hack of ade=uate
infrastructure and
communication facilities
?apacity to handle limited
orders
%ntimely delivery schedule
%nawareness of international
standards by many players in
the market
&"reats
Decline in 2ndia;s share
due to:
4etter =uality products
produced by competitors
from :urope, &outh
)frica, &outh )sia, etc.
4etter terms of trade by
competing countries
?onsistent =uality and
increasing focus on 3IB
by competing countries
4etter packaging
&tricter international
standards
)e*s#*sectorpapers*+,,
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)e*s#*sectorpapers*+,,